Hulamin Limited (HLM) Earnings Call Transcript & Summary

Okay. I think we're going to get started now. It's 3:00 according to my watch. May I extend to you a warm welcome to the 82nd Annual General Meeting of Shareholders of Hulamin and the third meeting held entirely via an electronic platform due to the COVID-19 pandemic, which option is available to Hulamin in terms of the company's act read with the memorandum of incorporation. To ensure smooth proceedings, I request representatives to send their questions via the comment section of the virtual meeting room if any shareholder or shareholder representative wishes to raise any questions. If appropriate, members are requested to reserve their questions until we reach the general agenda item. Members who have elected to vote at the meeting will be requested to e-mail their voting paper to Computershare who are acting as scrutineers at the following e-mail address, [email protected], once all these resolutions as set out in the Annual General Meeting notice have been considered. I will, at the appropriate junction of the meeting, remind members to do so. I will now request the Computershare representative to confirm that all shareholders present at the meeting have been verified by them.

I can confirm that all shareholders have been verified by me.

Thank you. Ms. Secretary, is the meeting properly constituted?

Yes, Chair. It is.

Yes?

[indiscernible] from Computershare. I'm not sure if you heard me. I confirmed for the shareholders.

We did hear you. Thank you for the confirmation.

Thank you, Mr. Chair.

The Secretary has confirmed that the meeting is properly constituted. I therefore formally declare the meeting properly constituted. The notice calling the meeting was duly circulated to shareholders on the 25th April 2022. This notice contains full details of the ordinary and special resolutions to be considered at this meeting. May it be taken as read. Ladies and gentlemen, in accordance with good governance and practice, the voting on all resolutions at this Annual General Meeting will be concluded by poll. This is to ensure a fair and accurate reflection of the votes cast. Those shareholders or representatives who opted to vote at the meeting today will be given a chance to submit their vote electronically to Computershare. Also to prevent frequent interruptions, which could occur if the votes were counted after each resolution, the voting papers will only be consolidated after the last of the resolutions have been addressed. The annual financial statements of the company on Page 72 to 161 for the year ended 31 December 2021, including the report of the directors on Pages 73 to 75, the independent auditor's report on Pages 80 to 82, and the Audit Committee report on Pages 77 to 79, all of which are incorporated in the integrated report, have been distributed to shareholders. We are now going to start dealing with the resolutions. The first one deals with the appointment of the auditor. I propose that Ernst & Young be appointed as the company's auditors and that Mr. Sifiso Sithebe be appointed as the designated auditor to hold office for the ensuing year. Is there a seconder for this motion?

Mr. Chairman, I second the motion.

This resolution has been proposed and seconded and is open for discussion. Ladies and gentlemen, those shareholders, all representatives voting today please record your vote on Line 1 of the voting paper. [Voting]

We now proceed to the resolutions dealing with the election of directors. With regards to the election of directors, separate resolutions have been put forward in respect of each director standing for election instead of one combined resolution. In our case, there are 5 directors who retire in accordance with the company's Memorandum of Incorporation and who, being eligible, offer themselves and -- being eligible and fully supported by the Board, offer themselves for reelection. Their abbreviated CVs were included in the notice of the Annual General Meeting. Starting with Mr. C.A. Boles, is there a proposal and seconder for his reelection as a director.

Mr. Chairman, I propose the reelection of Mr. C.A. Boles.

Is there a seconder?

Yes. Mr. Chairman, I second the proposal.

Mr. C.A. Boles has been proposed and seconded for reelection. Ladies and gentlemen, those shareholders and representatives voting today, please record your vote on Line 2 of the voting paper. [Voting]

The next director is Mr. M. Gounder. Is there a proposal and seconder for his reelection as a director?

Mr. Chairman, I propose the reelection of Mr. M. Gounder.

Mr. Chairman, I do second the resolution.

Mr. M. Gounder has been proposed and seconded for reelection. Ladies and gentlemen, those shareholders or representatives voting today, please record your vote on Line 3 of the voting paper. [Voting]

The next director is Mr. R. L. Larson. He's there a proposal and second for his reelection as a director?

Mr. Chairman, I propose the reelection of Mr. R. L. Larson.

Mr. Chairman, I second the resolution.

Mr. R.L. Larson has been proposed and seconded for reelection. Ladies and gentlemen, those shareholders or representatives voting today, please record your vote on Line 4 of the voting page. [Voting]

The next director is Mr. T.P. Leeuw. Is there a proposal and seconder for my reelection as a director?

Mr. Chairman, I propose the reelection of Mr. T.P. Leeuw.

Is there anyone to second that?

Mr. Chairman, I second the motion -- the resolution.

Okay. Mr. T.P. Leeuw has been proposed and seconded for reelection. Ladies and gentlemen, those shareholders and representatives voting today, please record your vote on Line 5 of the voting paper. [Voting]

The last director to be reelected is Mr. G. Watson. Is there proposal and seconder for this resolution?

Mr. Chairman, I propose the reelection of the G.H.M. Watson.

Is there a seconder for that resolution -- for that proposal?

Mr. Chairman, I second that resolution.

Mr. G. Watson has been proposed and seconded for reelection. Ladies and gentlemen, those shareholders all representatives voting today, please record your vote on Line 6 of the voting paper. [Voting]

We now proceed to deal with the appointment of the Group Audit Committee members. With regards to the reelection and the election of members of the Group Audit Committee, separate resolutions have been put forward in respect of each director standing for election. In our case, there are 3 members to be reappointed. I propose that the following members of the Group Audit Committee be reappointed as members, starting with Mr. N. Maharajh. Is there a proposal and seconder for this reelection as Chairman of the Audit Committee?

Mr. Chairman, I propose the reelection of Mr. N. Maharajh as Chairman of the Audit Committee.

Mr. Chairman, I second the resolution.

Mr. N. Maharajh has been proposed and seconded for reelection as a member and election as Chairman of the Audit Committee. Ladies and gentlemen, can I just take 1 minute. Ladies and gentlemen, those shareholders or representatives voting today, please record your vote on Line 7 of the voting paper. [Voting]

The next member is Mr. C.A. Boles. Is there a proposal and seconder for his reelection as a member.

Mr. Chairman, I propose the election of Mr. C.A. Boles.

Is there a seconder?

Mr. Chairman, I'd like to second the resolution.

Mr. C.A. Boles has been proposed and seconded for election. Ladies and gentlemen, those shareholders or representatives voting today, please record your vote on Line 8 of the voting paper. [Voting]

The next member is Dr. B. Mehlomakulu. Is there a proposal and seconder for his election -- for her election as a member?

Mr. Chairman, I propose the election of Dr. B. Mehlomakulu as a member of the Audit Committee.

Mr. Chairman, I second the resolution.

Dr. B. Mehlomakulu has been proposed and seconded for election. Ladies and gentlemen, those shareholders or representatives voting today, please record your vote on Line 9 of the voting paper. [Voting]

We now get to deal with the special resolutions, and specifically, that's dealing with the approval of nonexecutive director fees. Ladies and gentlemen, the resolution is as follows: resolved as a special resolution that the proposed fees set out in the notice payable to Nonexecutive Directors for their services as Directors on the Board and on Board Committees and as invitees 2 Board committees when invited by the Chairman of the Board committed to attend a meeting as an invitee a for 12-month period commencing 1st August 2022 be and are hereby approved. Now I propose that the special resolution dealing with the approval of nonexecutive directors' fees set out in the notice convening this meeting be adopted as a special resolution. Is there a seconder for this motion?

Mr. Chairman, I second the motion.

This resolution has been proposed and seconded and is now open for discussion. If there is no discussion, those shareholders or representatives voting today, please record your vote on Line 10 of the voting paper. [Voting]

We then deal with the second -- special resolution #2, and that deals with the provision of financial assistance. Ladies and gentlemen, the resolution is as follows: resolved as a special resolution subject to the provisions of Section 45(2) of the Companies Act that the provision of any financial assistance by the company to any company or corporation, which is related or interrelated to the company as defined in the Companies Act on the terms and conditions, which the Directors may determine be and is hereby approved. I now propose that the special resolution dealing with financial assistance as set out in the notice convening this meeting be adopted as a special resolution. Is there a seconder for this motion?

Mr. Chairman, I second the motion.

This resolution has been proposed and seconded and is now open for discussion. If there is no discussion, please record your vote on Line 11 of the voting paper. [Voting]

Then the special resolution dealing with -- which is in relation to the general authority to purchase shares in the company. Ladies and gentlemen, the resolution is as follows: resolved as a special resolution that the Board of Directors is hereby authorized in terms of this -- of Section 48(8) of the Companies Act by way of a renewable general authority in terms of the provisions of the listings requirements of the Johannesburg Stock Exchange Limited and as permitted by the company's memorandum of incorporation to approve the purchase by the company of its ordinary shares and/or the purchase of ordinary shares in the company by any of its subsidiaries or any trust controlled by the company upon which -- upon such terms and conditions and in such amounts as the Board may from time to time determine, but subject to the memorandum of incorporation of the company, the provisions of the Companies Act and the listing requirements of the JSE when applicable and provided that the conditions as more fully described in the notice convening this meeting are observed and fulfilled. I now propose that the special resolution dealing with the general authority to repurchase shares in the company, as set out in the notice convening this meeting, be adopted as a special resolution. Is there a seconder for this motion. Is there a seconder for this motion?

Mr. Chairman, I second that motion.

The resolution has been proposed and seconded and is now open for discussion. If there is no discussion, please record your vote on Line 12 of the voting paper. [Voting]

Having now dealt with the special resolutions, we then move on to deal with nonbinding votes. The first one deals with the remuneration policy. Ladies and gentlemen, the remuneration policy nonbinding vote reads as follows: resolved that the company's remuneration policy for financial year-end 31 December 2021 as contained in the remuneration policy as contained in the remuneration report set out on Pages 60 to 70 of the annual general meeting notice of which this notice forms part be and is hereby approved through a nonbinding advisory vote in accordance with the JSE Listing Requirements and the recommendation of King IV. I now propose that the resolution -- that the remuneration policy nonbinding advisory vote as set out in the notice convening this meeting be adopted. Is there a seconder for this motion?

Mr. Chairman, I'd like to second that motion.

This resolution has been proposed and seconded and is now open for discussion. If there is no discussion, those shareholders or representatives voting today, please record your vote on Line 13 of the voting paper. [Voting]

We now deal with the nonbinding advisory vote on the remuneration implementation report. Ladies and gentlemen, the remuneration implementation report nonbinding advisory vote reads as follows: resolved that the company's implementation report as contained in the remuneration report set out on Pages 68 to 69 of the annual general meeting notice be and is hereby approved through a nonbinding advisory vote in accordance with the JSE Listing Requirements and the recommendations of King IV. I now propose that the remuneration implementation report nonbinding advisory vote as set out in the notice convening this meeting be adopted. Is there a seconder for this motion?

Mr. Chairman, I second the motion.

This resolution has been proposed and seconded and is now open for discussion. If there is no discussion, those shareholders or representatives voting today, please record your vote on Line 14 of the voting paper. [Voting]

Before dealing with the report back of the Social, Ethics and Sustainability Committee and to allow the independent scrutineers to count the votes, those shareholders or representatives voting today are requested to e-mail their voting papers to [email protected]. The Computershare representatives will now tally up the votes received today. Please ensure that the voting paper is signed. Mr. V.N. Khumalo will now provide feedback on social and ethics matters pertaining to the company as set out on Page 171 of the annual general notice. Over to you, Mr. Khumalo.

Thank you, Chair. The following inter alia were discussed at the Social, Ethics and Sustainability Committee meeting held during 2021: the terms of reference incorporating the responsibilities prescribed by Social and Ethics Committee in terms of the Companies Act King IV Code of Corporate Governance and the annual workplan; strategy on how Hulamin will achieve this transformation, social and ethics goals; employment equity targets and the progress made in achieving same; Hulamin's BEE scorecard report and the impact of the new Broad-Based Black Economic Empowerment codes on Hulamin's score; environmental sustainability performance and the underlying resource efficiency performance; Hulamin's current carbon footprint and the strategies to reduce this in line with commitments made to customers and the science-based target for greenhouse gas reduction; the recycling content of our products and strategies for improvement; reports on disputes and stakeholder engagement issues; report on Hulamin's contribution to the greater Pietermaritzburg area and Hulamin's granting of sponsorships, donations and charitable giving; report on the educational development of employees; report on labor regulatory compliance; review of safety, health and environmental performance and policies; assurance on the implementation of Hulamin's compliance policies in customer dealings; review of the following codes and policies, stakeholder engagement policy, code of ethics incorporating code of conduct and ethics pertaining to the procurement staff, code of conduct for suppliers and service providers, corporate compliance policy, whistleblowing policy, crimes involving dishonesty, conflict of interest and gifts policy for employees; noting the fraud policy and fraud prevention strategy approved by the Audit Committee; risk oversight activities relative to B-BBEE, social and economic development, good corporate citizenship, environmental management, environmental sustainability, health and public safety, consumer relationships, labor and employment, ethics and stakeholders' reputational risk. In addition, the committee whose terms of reference include the functions to be performed by Social and Ethics Committee as prescribed by the Companies Act of 2008, which is to confirm that compliance by the group with the United Nations Global Compact Principles and the OECD recommendation is mandatory, which, in essence, relate to social, labor, environmental and anticorruption standards. Any noncompliance is therefore not tolerated by the group. The group complies with the Employment Equity and Black Economic Empowerment Acts. Specific targets have been set for the company to increase its levels of compliance with this acts over the short to medium term. The group complies with its code of ethics. The code of ethics of the group requires all directors and employees to be committed to fair dealing, honesty and integrity in the conduct of its business. The code of ethics has been endorsed by the Board and distributed to all employees in the group. Compliance by all employees to the high moral, ethical and legal standards of the code is mandatory. And if employees become aware of or suspect a contravention of the code, they must promptly and confidentially report it in the prescribed manner. Thank you, Chairman.

Thank you, Mr. Vusi Khumalo. We will -- thank you for that report. We will now proceed to have the company Secretary announce the results of the poll.

Thank you, Chair. I wish to just confirm that, currently, there's 66.18% of votable shares being represented at this meeting. And then in terms of the results that have been tallied, Chair, I can confirm that in respect of ordinary resolution #1, which speaks to the approval of the appointment of Ernst & Young as the independent auditors of the company with Mr. Sifiso Sithebe being designated as the company's auditor, we can confirm that there have been 100% of votes in favor thereof, meaning that there were no votes against or any abstention votes in this regard, Chair. And then as it relates to resolution #2.1, which speaks to the reelection of retiring directors, Mr. Boles as an Independent Nonexecutive Director. I can confirm that there have been 99.96% votes in favor of his reappointment as an Independent Nonexecutive Director and there have been 0.04% vote against his reelection, Chair. And then as it relates to ordinary resolution #2.2, this speaks to the election of Mr. Gounder as an Executive Director. I can confirm that there are 99.36% votes for his appointment and then there is a 0.64% vote against his appointment, Chair. And then as it comes to ordinary resolution 2.3, which speaks to the reelection of Mr. R. L. Larson as an Independent Nonexecutive Director. I can confirm that there are 99.37% votes for his appointment and 0.63% against his reappointment, Chair. And then as it pertains to ordinary resolution 2.4, which speaks to the reelection of the Chairman as an Independent Nonexecutive Director, I can confirm that there are 96.45% votes in favor of his reappointment and 3.55% votes against his reappointment. In respect of ordinary resolution 2.5, which speaks to the reelection of Mr. G.H.M. Watson as an Independent Nonexecutive Director, I can confirm that there has been 97.57% votes for his reappointment and 2.45% -- 2.43%, apologies, votes against his reappointment. And as it relates to ordinary resolution number 3.1, which speaks to the appointment of the Group Audit Committee members. In particular, the appointment of Mr. Maharajh as the Chairman, there has been 100% vote in favor of his reappointment. And then as it relates to ordinary resolution 3.2, the appointment of Mr. Charles Boles has also been voted for in favor by 100% of the members as well. And then as it relates to Dr. Mehlomakulu, I can confirm that there have been 99.96% votes in favor of her reappointment and then 0.04% vote against her reappointment. As it relates to the non-exec director fees, which is special resolution #1, there has been 95.56% for and 4.44% against. And as it pertains to special resolution #2, which speaks to the provision of financial assistance, I can confirm that there is 99.83% votes in favor thereof and 0.17% against that resolution. As it pertains to special resolution #3, which is the general repurchase of the company's shares, I can confirm that there is a 99.39% vote for the resolution and 0.61% votes against. And as it pertains to the 2 remuneration votes, I can confirm that the nonbinding advisory vote in relation to the remuneration policy has been voted for by 90 -- let me just confirm, by 95.18% of the members and then 4.82% have voted against. And then when it comes to the final resolution, which is nonbinding advisory vote that talks to the implementation report of the remuneration policy, it has been voted for by 95.25% of the shareholders and 4.75% have voted against that resolution. Thank you, Chair.

Thank you, Ms. Secretary. Can I confirm that it's a practice for these results to be published on stock exchange service? Okay. Thank you for that. Colleagues, we now get to -- we now come to general. I am aware that there are several questions that some attendees have raised through our chat line. Who is assisting us in reading those questions?

I will be assisting in the reading of the questions, Chair.

Okay. Thank you.

Thanks, Chair. The first question, Chair, it comes from [ Mr. Skitter ] and it reads as follows: Hulamin made in the 2021 financial year a profit loss of less than -- sorry, a profit of less than ZAR 140 million. Taking the metal lag profit of ZAR 426 million out and then ZAR 140 million, approximately USD 8 million in 1 year is highly disappointing, taking into account that more than 50% of the business is done in international markets, which have boomed in a way not seen in the last 40 years. And locally, you are now protected with a 15% import duty on alu semi products. Hulamin peers and international competitors, such as Novelis, Hindalco, Hydro and AMAG and basically all other aluminum semi producers made a record profit in 2021. Why did Hulamin underperform again in 2021? What is management doing to substantially increase profitability in 2022 and following years? So Chair, would you prefer that I take all the questions, say 3 questions at a time and then they get addressed and then I take the next batch of questions.

Let's take them one at a time.

Okay. I'll pause here, Chair.

Okay. You want to assist with that, Richard?

Yes. Thank you, Chair. I'm not going to comment on the first part of that question with the late submission of that question. I haven't had time to check the factual basis of it. But what I will comment on is what is management doing to substantially increase profitability in 2022 and following years. And I think it's a fairly straightforward response to that. We have, in the past couple of years, had a lot of pressure on the business. Being a heavily fixed cost business, we're very sensitive to volume. We did manage to significantly increase volume and get close to our longer-term average last year. So volume is a key driver of improved profitability in 2022. And likewise, we are negotiating and realizing measurably higher prices in 2022. In spite of significant cost pressures, we are able to pass most of our cost pressures or many of our cost pressures on to our customers. So to summarize the response: we are increasing volumes, we're realizing better prices and we're keeping costs under control.

Thank you, Richard. Let's move on to the next question then.

Thank you, Chair. The next question reads as follows: it's from [ Mr. Skitter ] again, Chair. On Page 26 of your report under issue indicators of uncertainty, you mentioned the increase of working capital required in 2022 resulting in a cash flow restraint at Hulamin this year. You also stated in this paragraph that a less preferred, but possible way of dealing with such cash flow limitation could include temporary curtailment of operational activity. To me, this sounds like a fiasco as you would voluntarily reduce the volume of your business, producing and selling less tonnage as you normally could, as you have not got the cash to finance this business. Please let us know your current available headroom and if you indeed had to reduce your activities due to reaching the limit of your cash available. I'll pause there, Chair. Thanks.

Okay. Mark, you want to take that?

Thanks, Chair. Due to the raising LME pricing, it did put severe constraints on our working capital, but I'm pleased to report that we've managed to acquire increase in working capital itself, facilities to the magnitude of additional ZAR 200 million, which puts us right now in a situation of sufficient headroom to maximize the volumes in line with our aspirations for the 2022 year. Thanks, Chair.

Thank you, Mark. Okay. Let's move on to the next one then.

Okay. Chair, it's a follow-up question from [ Mr. Skitter ] and it reads as follows: the total salaries went up by 11.5% in 2021. The salary of the CEO, Mr. Richard Jacob's went from ZAR 6.7 million in 2020 to now ZAR 12 million. All admin expenses are now 4.1% to revenue. Between 2010 and 2019, this was on average 1.35%. Can you please explain or justify such grandiose in times of such continuous underperformance of our company.

I think it will be a dual act between Charles, Chair of Remco; and Richard. And Mark will chip in, I'm sure.

Thanks, Chair. I'll respond and Richard and Mark will please add in. Good afternoon, [ Mr. Skitter ]. I think I'll make a couple of comments. I think, first of all, I'm not sure the basis of comparison is good. You're saying that salaries and wages went up by just over 11%. And comparing 2020 to 2021, there would have been a normal inflationary increase, but a significant contributor would be that the plant during 2020 due to COVID was not operating at periods of time. So that would have impacted allowances and compensation. So the -- it's comparing a full year of activity to an incomplete or nonfull year. So the 11.5% is not a gratuitous payment away. It reflects that there was some increase in line with inflation and then there was more activity. So that's the overall salary bill. I think on the executive compensation, I think it's important to look at the components. So there was an inflationary type increase on total guaranteed package. The other 2 components that had an impact in '21 that weren't relevant in 2020 was the STI and the long-term incentive, the LTI. Let's look at those 2. So in terms of the STI, that's linked to performance for the year. I would say to you that the business improved from a net loss of ZAR 240 million to a profit of ZAR 591 million. Hulamin is -- recognizes actual profit. We're cognizant that excluding abnormal items normally leads to criticism and normally needs to add backs that favor management. So it's based on the actual profit. There was a considerable increase in profitability and that's why STI payments were due to management, including Mr. Jacob. So that's the STI. The LTI, which is approximately ZAR 2 million, that's accounted for but not in hand. So what does that mean? That means that to get that LTI, that's based on performance over 3 years. So that amount is not just a cash amount put into hand. That amount is linked to performance, and performance over the next 3 years will determine if that value is actually put into the hands of the executive. So I hope that clarifies the increase in executive compensation. On the administrative expenses, it has increased. I think taking a very broad expense category is quite difficult to comment on. Costs also have been allocated. You're talking about a period of 12 years. Cost allocations have changed over that period in the way indirect costs are dealt with. So I'm not sure that it's a very useful or meaningful or relevant comparison to compare the percentage of admin costs in the 1 year to a period approximately a decade ago. Hopefully, that's given you a comprehensive answer. Thank you.

Thank you, Charles. I think that's a full and complete response to that question. I don't think it requires any additional comments from both Mark and Richard. So let's then move on to the next question, Ms. Secretary. Thank you.

Okay, Chair. The next question is also from [ Mr. Skitter ] and it reads as follows: four years ago, you promised to focus your production under the headline cans and cars. It is clear that cans have indeed become your major single product. By knowing your product range quite well, I cannot see today any other focus in your product range. Certainly, no particular focus on cars or Hulamin leaving one product range, for example, foil, where the volumes you produce will never allow you any profitability. What are your plans and your time line in getting the focus done as stated 4 years ago? Thanks, Chair.

Thank you. Richard?

Thank you, Chair. I think the comment that I would make on this question is that our cars focus is active and progressing particularly well. We have developed a number of new technologies. We have 6 new customers in the U.S., some of whom are new and emerging electric vehicle producers. What I would say, though, is that this is competitive information. And because of the competitive nature of the industry, we are very reluctant to disclose specific details, specific volumes of the thousands of tons we're now supplying into these various OEMs as well as component manufacturers locally and internationally. So I can say that we are setting a number of thousands of tons into the automotive industry, new thousands of tons in addition to some of our traditional automotive business. And we have at least 6 new customers there, but I'm not happy to disclose any more than that.

Thank you, Richard. Let's then move on to the next question. I think what we'll do -- [ Mr. Skitter ] has asked an additional question. But I think what we'll do is give the other questions from other participants a bit of airtime and then we'll come back to his -- hopefully, his last question. Okay, Ms. Secretary?

Okay. Thank you, Chair. The next question comes from Mmamokgopane from All Weather Capital, and it reads as follows: Hulamin has been under cautionary since October 2021. Is there any update on this process?

Thanks, Ms. Secretary. I'll take that one. We unfortunately do not have an update to offer. What I can say, though, is that all parties have been meaningfully engaged. And we're working hard at getting ourselves to a point where we can bring something -- announce something. And yes, we are, at this stage, unable to make any announcement, but we will do so as soon as we are in a position to announce.

Thanks, Chair. The next question is from Niall, it's from Flagship Asset Management. And then it reads as follows: how are we able to ask questions or discuss anything regarding specific resolutions.

I think all participants were encouraged to ask questions regardless of whether those stem from anything they may have come across going through the financial statements to anything that may have come across going through the remuneration policy or the remuneration implementation report. So we haven't limited questions to certain parts of the integrated report. So I would encourage Mr. Niall Brown to raise whatever question he may have.

Thanks, Chair. This is -- the next question is also from him. It reads, do you believe that you are on track for production of 215,000 tons of rolled products this calendar year?

Richard?

Thank you, Chair. I think what I could say here is we're not really in business of forecasting volumes. We plan and we forecast from -- in various time horizons. What I can say is that we're not aware of anything at the moment that seem -- that will stand in our way of getting to the 215,000 tons this year. So yes, it's only the uncertainty of future events that will bring that into question.

Okay. Thank you, Richard. Next question, Ms. Secretary.

The next question is also from Mr. Brown, Chair, and reads as follows: I assume that the pressure on your working capital has eased with the aluminum price coming back from over USD 3,500 to USD 2,900 presently. Please comment on that and your working capital and borrowing situation generally and the bank covenants, too. Thanks.

Do you want to tackle that, Mark, and Richard can fill in.

Thanks, Chair. As alluded earlier, we managed to get additional liquidity or facilities in play. Even though the LME pricing has dropped down substantially right down to currently trading at about $2,800, we do have sufficient headroom in play and facilities in play to mitigate our way and continue our drive of maximizing production. So from a liquidity point of view, we've also embarked on maximizing our working capital and looking at various initiatives to drive utilization of our working capital and optimize as much as possible. I believe strongly with all the mitigation actions and the proactiveness of the management team as a whole. We have put measures in play to deliver on our goals for the 2022 year. Thanks, Chair.

Thank you, Mark. Let's move on to the last 2 questions. Right?

Yes, Chair. The next question is from [ Alan ], Chair, from [ Microtel SA ], and it reads as follows: your export profits have always been low. Why? Do you need to pay many third parties' commissions for these sales? Do you direct -- sorry, do you do direct sales with your customers? Thanks, Chair.

Thank you, Chair. I think to answer this question directly, we sell direct -- exports almost 100% directly to customers. There are a handful of traders that we deal with, but they still direct sales. So we don't -- we have a very, very, very few commissioned agents in very few markets. I think Singapore is about the only commissioned agent we have left. So the answer is pretty straightforward, almost 100% of our exports are direct to customers.

Thank you. Thank you, Richard. The last question, and that's from [ Mr. Skitter ], right? Okay.

Thank you, Chair. It reads as follows: Charles, thank you for answering my question. If you do not want to compare the admin expenses between 2021 and 2020, then let us look at this expense line in 2019 where the tonnage produced is basically the same comparing 2019 and 2021. Then the admin expenses have nearly doubled. This still looks very, very bad. Please comment. Thanks, Chair.

Good question. I think the category is very difficult because it includes a number of line items, many of which are one-offs or abnormal items. So it's not a line item that easily lends itself to comparison because there's a lot of constituent elements. I'll give you one example. COVID costs, which have been significant in 2020 and 2021 weren't applicable in 2019. So that's a significant cost line item during that period. I come back to the comment I made a little bit earlier, which is that the classification and allocation of costs got refined in 2021. So comparing that category to the same line item wouldn't be comparing like with like. Third point I'd make is that the performance of 2019, as you rightly brought to the fore, is the business lost -- made significant losses. The performance was poor and performance in 2021 has been considerably better. So that led to STI payments, not just to executives, but to many people in the organization. Hulamin has worked hard to create incentives to improve and direct performance in the right direction. So the cost has increased. There's a number of moving parts in that. And I'm not sure that you could meaningfully compare the aggregate in 1 year to 2019, particularly with the cost reclassifications. Thanks very much.

Thank you, Charles. I think we have got no further questions to have responded to, which then concludes the business of this annual general meeting. I thank those shareholders and representatives who joined us on this call, and I also thank them for raising the questions. My sincere hope is that they have been satisfactorily answered. We then will close this meeting. But before we all adjourn, I'd like to read a statement providing a business update, and it reads as follows: following the COVID-19-related operational volatility in 2019, 2020 and 2021 and implementation of its turnaround actions, Hulamin presented improved operational and financial performance in 2020. Through late 2019 to 2021, Hulamin Rolled Products improved its sales volumes and rolling margins. These improvements were achieved on the back of more stable manufacturing performance, growth in local beverage can sales, improving prices and a lower cost base. Despite a 125% increase in the rand price of aluminum and related working capital absorb -- and related capital absorption, Hulamin generated free cash flows of almost ZAR 240 million in 2021. Although manufacturing consistency improvement is yet to regain full momentum, financial performance has continued its positive trajectory. This has been supported by steady demand for Hulamin products, ongoing strength in the aluminum price and consistently firm rolling margins -- volume margins, yes. Hulamin Containers and Hulamin Extrusions are both performing well. Rises in the rand aluminum price through 2020 and 2022 continue to stretch our cash resources. We are, however, appreciative of the support of our funders who have increased facilities to match the rand aluminum price pressures on working capital. As a result of tightness in liquidity, Hulamin exposure to the rand aluminum price remains unhedged. We will, therefore, remain fully exposed to movement in the rand value of the underlying commodity. Global demand for aluminum flat rolled products continues to exceed supply across most markets. We see ongoing extended lead times in the industry and particularly in the beverage can sector. In Europe and in the U.S.A., trade barriers continue to tighten. Supply in aluminum's traditional global markets remains tight. Demand from Hulamin Rolled Products customers, therefore, is firm and Hulamin's order book is currently full. Demand is likely to remain solid for the balance of 2022. Hulamin Extrusions continue to perform well in 2022, supported by steady volumes, cost controls, metal price lag and ongoing favorable supply-demand dynamics in the local market. The rand-U.S. dollar exchange rate has weakened recently, following a short period below ZAR 15 to the dollar in March and April 2022. This will remain a key driver of profits in the balance of the year ahead, alongside sales volumes and firmer rolling margins currently being recorded. Cash flows will continue to be affected by the rand aluminum price. Any forward-looking information contained in this announcement has not been reviewed or reported on by the company's external auditors. And the statement ends there. Having read that statement, I think we are -- I'm going to declare this -- I'm going to bring this meeting to an end. Thank you, once again, for all your participation, and goodbye.